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Observations #53
A set of ideas and observations from a week’s worth of work analyzing businesses and technologies.
Unsolved mysteries of the brain
The Allen Institute recently put out the 5 mysteries of the brain, which I thought were pretty interesting and a useful way to frame some of the important problems to work on in neuroscience:
What is the brain made of? - the brain is made up of 2 cell types: neurons and glia cells. With over 80 billions of cells interconnected (over 100T connections in the brain), comprehensively classifying brain cells is an outstanding problem. Single-cell sequencing, imaging, MRI, and other tools are useful to map out cell morphology, location, connectomic, and electrophysiology to sort cells by unique features. Neurons and glia cells can be classified by gene expression - https://www.nature.com/articles/s41586-018-0654-, and the Allen Institute has open sourced an atlas of cells in the brain - http://celltypes.brain-map.org The BRAIN Initiative from the NIH is also an important initiative.
How does the brain change in disease? - once an atlas can be generated, finding which cell types are key drivers to disease is the next step. This “brain’s parts list” can reveal vulnerable neurons and their growth trajectory opening up new drug targets. Tools that perturb neurons, mainly optogenetics, can be used to validate which specifics classes of brain cells initiate a disease phenotype - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6488459 This sets up therapies that target specific cell types in the brain. Gene therapies are useful here. Selective delivery of ASOs, small molecules, and biologics would need to be solved to talk advantage of a brain atlas.
How do neurons talk to each other? - a roadmap for the brain is needed to understand how brain cells communicate and the mechanism-of-action for drugs. Neurons talk to each other through synapses (axon:dendrites) mainly through 2 neurotransmitters: GABA and glutamate. An outstanding problem is to map out all the brain’s signals and for which synapses.
How does the brain compute? - the principles of computation in the brain are not well understood. Until we have an atlas and roadmap, we still a long way here from understanding how information is represented in the human brain.
What will it mean to understand our brains? - the last mystery is establishing abstract rules that can predict brain activity (i.e. neurons that fire together wire together).
Rolling up biopharma services companies
CROs and CDMOs have gotten larger over the last decade or so. This market consolidation has transformed some of these service providers to key strategic partners in drug development. Companies like Lonza, Catalent, CRL act as one-stop shops. The top 10 CROS represent ~60% of the market and the top 5 CDMOs take over 15% of the market. This push to consolidation is driven by the need to reach critical mass in order to lock-in large, multi-year contracts with biopharma. Given this dynamic, there is an interesting opportunity to roll up the smaller service providers either by incumbents or private equity. Even marketplaces like ScienceExchange and Scientist.com are taking advantage of this market dynamic. Given the economies of scale, especially for biomanufacturing of cell and gene therapies, the CDMO market is likely to become similarly concentrated as the CRO market.
CROs like PPD (1985) and Quintiles (1982) emerged in the 1980s with the industry growing rapidly in the mid-1990s - https://pharmaphorum.com/views-and-analysis/a_history_of_contract_research_organisations_cros/ As biologics got to market, CDMOs like Lonza and Catalent scaled rapidly dominate the industry by therapeutic classes and cell culture (i.e. microbial, mammalian). These companies have been essential to create standards in drug development and lower the barriers to entry to start a new company and create new medicines. As the CRO and CDMO markets continue to consolidate, the middle-market is becoming non-existence in biopharma services and has left over 1000 small businesses in the US. Beyond rolling up these smaller companies, is there a way to actually cultivate entrepreneurship for biopharma services? Maybe creating a CRO to power AI-drug companies might be venture-scale? HEK293 design for AAV gene therapies? CHO cell services for biologics?
Type 1 Diabetes
Type 1 diabetes (T1D) is an autoimmune disease characterized by T-cell mediated destruction of insulin-secreting β islet cells in the pancreas. There are over 1M T1D patients in the US that require daily insulin injections to manage symptoms. Progress in stem cell research along with better tools to engineer the immune system have created an opportunity to develop curative treatments for these patients.
A few thousand T1D patients over the last couple decades have actually received islet transplants from cadavers. However, cadaver tissue is pretty scarce, and as a result, stem cell-derived islets are needed. The barriers for this technology to make an impact on type 1 diabetes is cell reprogramming and immunosuppression. Any cure for T1D needs to replace the β islet cells that have been destroyed and stop the human immune system from destroying the transplanted cells. There are also opportunities to get the body to regrow these cells.
For reprogramming, the key issues to solve are getting cells that resemble islet cells and showing similar clustering within the pancreas. Moreover serum- and xeno-free manufacturing is needed. For immunosuppression, developing medicines that stop the immune system from attacking insulin-producing cells are needed. Another way to solve this problem is encapsulating reprogrammed cells to protect them from recipient T-cells. Encapsulation, often with a semi-permeable bag that allows insulin to diffuse out but prevent other cells from coming in, can remove the need for immunosuppression and prevent immune rejection of a transplant.
For these strategies, getting reprogrammed islet cells to produce insulin in vitro had been a major problem that has been solved by great labs and companies like Semma Therapeutics and ViaCyte.Semma was recently acquired by Vertex and is entering clinical trials with their stem-cell derived islet cells. ViaCyte is a leader in immunoprotection. The company has an ongoing phase 2 trial for their encapsulated functional islet cells; their Encaptra device is implanted under the skin. The success of these trials will depend on delivery - Semma is actually developing their own encapsulation device and other opportunities exist to expand this concept to other autoimmune diseases.